Getting paid for building work
In October 2011 the scope of the Construction Act (Housing Grants Construction and Regeneration act - 1996) was extended to include contracts not in writing.
The Construction Act provides for adjudication and payment provisions where the parties to a construction contract do not make adequate provision in the contract for these essential cash-flow mechanisms - there are also provisions in the Act allowing the contractor or sub-contractor to suspend work, or part of the work, if they are not paid in accordance with the statutory scheme. If an application for interim payment is made within statutory scheme then unless the payer gives notice within the specified time the full application becomes a due debt and it can be rapidly and safely collected by a number of enforcement methods.
Anyone in the construction industry should ask themselves whether they fully understand the practical effect of the recently amended Act, whether their systems need to be revised to take account of those changes and whether they want to rely on a contractual mechanism of their own design or on the statutory scheme, they should also see whether they have the ability to suspend their own subcontractors in the event they wish to suspend against the party employing them. For more information or to ask a question click here.
Jonathan Waters has over 12 years of experience advising businesses in relation to commercial disputes and how to avoid or resolve them. He has a particular interest in construction law and adjudication, and he is currently studying for an Msc in Construction Law & Dispute Resolution at King's College. Before starting Helix Law, he was the partner in charge of Commercial Litigation, Employment Law and Property Litigation at Stephen Rimmer LLP. He has a degree in Business Administration and before qualifying as a solicitor he worked in industry and investment banking for over a decade.
This article is written to raise awareness of the issues it discusses and it may not be updated after it is first written, even if the law changes. It is not intended to be legal advice and cannot be relied on as such. Helix Law is not responsible or liable for any action taken or not taken as a result of this article. If you think the matters set out affect you and you wish to apply them to your particular circumstances then we are happy to give you free initial telephone advice.